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CIRCULAR No

CIRCULAR No. 89/2002/TT-BTC OF OCTOBER 9, 2002 GUIDING THE ACCOUNTING IN IMPLEMENTATION OF FOUR (04) ACCOUNTING STANDARDS ISSUED TOGETHER WITH THE FINANCE MINISTER�S DECISION No. 149/2001/QD-BTC OF DECEMBER 31, 2001

Pursuant to the Finance Minister�s Decision No. 149/2001/QD-BTC of December 31, 2001, issuing and announcing four (04) Vietnamese accounting standards (phase 1);

Pursuant to the Enterprise Accounting Regime issued together with the Finance Ministry�s Decision No. 1141/TC/QD-CDKT of November 1, 1995 and circulars guiding the amendments and supplements thereto;

The Ministry of Finance hereby guides the accounting in implementation of the above-mentioned four accounting standards for application to enterprises of all branches and economic sectors nationwide, excluding enterprises applying the Small-and Medium-Sized Enterprise Accounting Regime issued together with the Finance Minister�s Decision No. 1177/TC/QD-CDKT of December 23, 1996 and Decision No. 144/2001/QD-BTC of December 21, 2001.

I. GUIDANCE ON ACCOUNTING OF THE STANDARD "INVENTORY"

1. Accounting of fixed general production costs

- When fixed general production costs are incurred, record:

Debit in Account 627 - General production costs (Details of fixed general production costs)

Credit in Accounts: 152, 153, 214, 331, 334�

- At period-end, to allocate and transfer fixed general production costs into the processing cost of each product unit according to the normal capacity level, and record:

Debit in Account 154 - Incomplete production and business costs

Credit in Account 627 - General production costs (Details of fixed general production costs).

- Where the quantity of actually-manufactured products is lower than the normal capacity, accountants must calculate and determine fixed general production costs allocated to the processing cost of each product unit according to the normal capacity level. Unallocated fixed general production costs (the positive difference between the total fixed general production costs that are actually incurred and the fixed general production costs calculated into product price is not calculated into the product price) shall be recognized into the cost of goods sold in the period, record:

Debit in Account 632 - Cost of goods sold (Details of unallocated fixed general production costs)

Credit in Account 627 - General production costs

2. Accounting of inventory losses

- On the basis of the reports on inventory losses, accountants shall reflect the value of inventory losses, and record:

Debit in Account 1381 - Deficit assets to be handled

Credit in Accounts: 151, 152, 153, 154, 155 and 156.

- On the basis of the reports on the handling of inventory losses, accountants shall record:

Debit in Accounts 111, 334� (Compensations to be paid by organizations and/or individuals)

Debit in Account 632 - Cost of goods sold (inventory losses minus compensations paid by organizations and/or individuals at fault, which have been reflected in the cost of goods sold)

Credit in Account 1381 - Deficit assets to be handled.

3. Accounting of the inventory price decrease reserve

At the end of the annual accounting period, when the net realizable value of inventory is smaller than their original price, an inventory price decrease reserve must be set up. The inventory price decrease reserve to be set up shall be equal to the difference between the higher original price and the net realizable price of inventory.

- Where the inventory price decrease reserve to be set up at the end of the current year�s accounting period is bigger than the inventory price decrease reserve already set up at the end of the previous year�s accounting period, the bigger difference shall be added, record:

Debit in Account 632 - Cost of goods sold (Detailed inventory price decrease reserve)

Credit in Account 159 - Inventory price decrease reserve.

- Where the inventory price decrease reserve to be set up at the end of the current year�s accounting period is smaller than the inventory price decrease reserve already set up at the end of the previous year�s accounting period, the smaller difference shall be re-included, record:

Debit in Account 159: Inventory price decrease reserve

Credit in Account 632: Cost of goods sold (Details of the inventory price decrease reserve).

II. GUIDANCE ON ACCOUNTING OF THE STANDARD "TANGIBLE FIXED ASSETS"

1. Regarding the content of reflection of Account 211 - Tangible fixed assets, the section on the historical cost of tangible fixed assets shall be revised on a case-by-case basis as follows:

Procured tangible fixed assets: The historical cost of tangible fixed assets consists of the buying price (minus trade discounts and price reductions), taxes (excluding refunded taxes) and expenses directly related to the putting of assets into the ready-for-use state, such as ground preparation expense, initial transportation, loading and unloading expense, installation and trial operation expenses (after subtracting (-) amounts recovered from products and/or discarded materials from trial operation), expenses for experts and other direct related expenses.

Tangible fixed assets formed from capital construction investment by the contracting mode: For tangible fixed assets formed from construction investment by the contracting mode, their historical cost is the settlement prices of construction investment works, other direct related expenses and registration fee (if any).

Tangible fixed assets procured on deferred payment: Where tangible fixed assets are procured by the mode of deferred payment, their historical cost shall be reflected according to the buying price paid at the buying time. The difference between the buying price to be paid later and the spot buying price shall be accounted into expenses according to the payment period, unless such difference is calculated into the historical cost of tangible fixed assets (capitalization) according to the provisions of the Standard of "Borrowing expenses."

Self-constructed or self-made tangible fixed assets: The historical cost of self-constructed tangible fixed assets is the actual cost of self-constructed or self-made fixed assets plus (+) installation and trial operation expenses. Where the enterprises turn their self-made products into fixed assets, the historical cost shall be the production cost of such products plus (+) expenses directly related to the putting of the fixed assets into the ready-for-use state. In the above-said cases, all internal profits must not be calculated into the historical cost of such assets. Unreasonable expenses such as those for wasted raw materials and/or materials, for labor, or other excessively high expenses incurred in the self-construction or self-making process must not be calculated into the historical cost of tangible fixed assets.

Tangible fixed assets purchased in the form of exchange: The historical cost of tangible fixed assets purchased in exchange for dissimilar tangible fixed assets or other assets shall be determined according to the reasonable value of the received tangible fixed assets, or the reasonable value of exchanged assets, after adjusting cash amounts or cash equivalents additionally paid or received.

The historical cost of tangible fixed assets procured in the form of exchange for similar ones or possibly formed from the sale for the right to own similar assets (similar assets are those with similar utilities, in the same business domain and of equivalent value). In both cases, there will be neither profit nor loss recognized in the exchanging process. The historical cost of received tangible fixed assets shall be calculated as equal to the residual value of exchanged fixed assets. For example: The exchange of similar tangible fixed assets is like the exchange of machinery, equipment, transport means, service establishments or other tangible fixed assets.

2. Method of accounting major economic operations related to the increase in tangible fixed assets

2.1. For cases where tangible fixed assets are procured by the mode of deferred or installment payment:

- When tangible fixed assets are purchased by the mode of deferred or installment payment and immediately put into production and/or business activities, record:

Debit in Account 211 - Tangible fixed assets (historical cost, recorded according to the spot buying price)

Debit in Account 133 - Deducted VAT (if any)

Debit in Account 242 - Prepaid long-term expenses (the interest on deferred payments is the difference between the total payable amount minus (-) the spot buying price minus (-) VAT (if any)

Credit in Account 331 - Payables to sellers (total payment price).

- Every period, when making payments to the sellers, accountants shall record:

Debit in Account 331 - Payables to sellers

Credit in Accounts 111 and 112 (Periodically payable amounts include the original price and interests on deferred payments or periodically payable installments).

Concurrently calculate into expense the interests on deferred payments or installments payable for each period, and record:

Debit in Account 635- Financial expenditures

Credit in Account 242 - Prepaid long-term expenses.

2.2. For cases where the enterprises are donated or presented with tangible fixed assets and immediately use them for production and business activities, record:

Debit in Account 211 - Tangible fixed assets

Credit in Account 711 - Other incomes.

Other expenses directly related to donated or presented tangible fixed assets shall be calculated into their historical cost, and record:

Debit in Account 211 - Tangible fixed assets

Credit in Accounts 111, 112, 331�

2.3. For cases where tangible fixed assets are self-made:

- When the enterprises convert products made by themselves into tangible fixed assets for use in production and business activities, record:

Debit in Account 632 - Cost of goods sold

Credit in Account 155 - Finished products (if delivered from stores for use)

Credit in Account 154 - Incomplete production and business costs (if products are put into use immediately after their manufacture without being warehoused).

Concurrently record as increase in tangible fixed assets:

Debit in Account 211 - Tangible fixed assets

Credit in Account 512 - Internal turnover (turnover is the actual price of products).

- For installation and trial operation expenses� related to tangible fixed assets, record:

Debit in Account 211 - Tangible fixed assets

Credit in Accounts 111, 112, 331,�

2.4. For cases where tangible fixed assets are purchased in the form of exchange

2.4.1. Tangible fixed assets purchased in the form of exchange for similar ones:

- If receiving similar tangible fixed assets from exchange and immediately using them in production and business activities, record:

Debit in Account 211 - Tangible fixed assets (The historical cost of received tangible fixed assets shall be recorded according to the residual value of exchanged fixed assets)

Debit in Account 214 - Wear of fixed assets (Depreciated value of exchanged fixed assets)

Credit in Account 211 - Tangible fixed assets (The historical cost of exchanged tangible fixed assets).

2.4.2. Tangible fixed assets purchased in the form of exchange for dissimilar ones:

- When handing over tangible fixed assets to the exchanging party, accountants shall record them as a decrease in fixed assets:

Debit in Account 811 - Other expenditures (Residual value of exchanged tangible fixed assets)

Debit in Account 214 - Wear of fixed assets (Depreciated value)

Credit in Account 211 - Tangible fixed assets (Historical cost).

Concurrently record them as an increase in income from the exchange of fixed assets:

Debit in Account 131 - Receivables from customers (Total payment price)

Credit in Account 711 - Other incomes (Reasonable value of exchanged fixed assets)

Credit in Account 3331 - Payable VAT (Account 33311) (if any).

- When receiving tangible fixed assets from exchange, record:

Debit in Account 211 - Tangible fixed assets (Reasonable value of fixed assets received from exchange)

Debit in Account 133 - Deducted VAT (if any)

Credit in Account 131 � Receivables from customers (Total payment price).

For cases where additional sums must be collected as the reasonable value of exchanged fixed assets is bigger than the reasonable value of fixed assets received from exchange, after receiving such sums from the owners of received fixed assets, record:

Debit in Accounts 111, 112 (Sums already additionally collected)

Credit in Account 131 - Receivables from customers.

For cases where additional sums must be paid as the reasonable value of exchanged fixed assets is smaller than the reasonable value of fixed assets received from exchange, after paying such sums to the owners of received fixed assets, record:

Debit in Account 131 - Receivables from customers.

Credit in Accounts 111, 112�

2.5. For cases where tangible fixed assets being houses, architectural objects associated with the land use right are purchased and immediately used for production and business activities, record:

Debit in Account 211 - Tangible fixed assets (Historical cost - details of houses and architectural objects)

Debit in Account 213 - Intangible fixed assets (Historical cost - Details of land use right)

Debit in Account 133 - Deducted VAT (if any)

Credit in Accounts 111, 112, 331�

2.6. For tangible fixed assets currently recorded in the enterprises� books, which fail to meet the recognition criteria defined in the standard of tangible fixed assets and, therefore, must be regarded as tools and instruments, accountants must record them as decrease in tangible fixed assets:

Debit in Account 214 - Wear of fixed assets (Depreciated value)

Debit in Accounts 627, 641 and 642 (Residual value) (If residual value is small)

Debit in Account 242 - Prepaid long-term expenses (Residual value) (If residual value is great and must be gradually allocated)

Credit in Account 211 - Tangible fixed assets.

2.7. When the capital construction work is completed and assets are handed over and used for production and business activities, record:

Debit in Account 211 - Tangible fixed assets

Credit in Account 241 - Unfinished capital construction.

- If assets formed through investment fail to satisfy the tangible fixed asset recognition criteria prescribed in the accounting standards, record:

Debit in Accounts 152 and 153 (if they are materials and tools put into stores)

Credit in Account 241 - Unfinished capital construction.

2.8. Expenses incurred after initial recognition relating to intangible fixed assets, such as repair, renovation and upgrading:

- When expenses for repair, renovation and/or upgrading of tangible fixed assets are incurred after initial recognition, record:

Debit in Account 241 - Unfinished capital construction

Credit in Accounts 112, 152, 331, 334,�

- When the repair, renovation and/or upgrading are completed and the fixed assets are put into use, record:

+ If they satisfy conditions for recording as increase in the historical cost of tangible fixed assets according to the provisions of accounting standards, record:

Debit in Account 211 - Tangible fixed assets

Credit in Account 241 - Unfinished capital construction.

+ If they fail to satisfy conditions for recording as increase in the historical cost of tangible fixed assets according to the provisions of accounting standards, record:

Debit in Accounts 627, 641 and 642 (if their value is small)

Debit in Account 242 - Prepaid long-term expenses (if their value is big and must be gradually allocated)

Credit in Account 241 - Incomplete capital construction.

3. Guidance on accounting of expenses not allowed to be calculated into the historical cost of fixed assets

For self-constructed or self-made tangible fixed assets, such unreasonable expenses as wasted raw materials and materials, labor or other amounts spent in excess of the normal level in the process of self-construction or self-making shall not be calculated into the historical cost of fixed assets, record:

Debit in Accounts 111, 138, 334� (Compensations paid by organizations and individuals)

Debit in Account 632 - Cost of goods sold

Credit in Account 241 - Unfinished capital construction (for self-construction)

Credit in Account 154 - Incomplete capital construction expenses (for self-making).

III. GUIDANCE ON ACCOUNTING OF THE STANDARD "INTANGIBLE FIXED ASSETS"

1. Guidance on the content and method of accounting Account 213 � Intangible fixed assets

This Account is used to reflect the present value and the fluctuation situation of increase, decrease in intangible fixed assets of the enterprises.

Intangible fixed assets are assets which have no physical form but their value can be determined, are possessed by enterprises for use in their production, business, service provision or lease to other subjects in compliance with the intangible fixed asset-recognition criteria.

The accounting of this account should respect the following regulations:

1. The historical cost of intangible fixed assets consists of all the costs incurred by the enterprises to acquire intangible fixed assets, calculated up to the time of putting such assets into use as planned.

- The historical cost of intangible fixed assets purchased separately includes the buying price (minus (-) trade discounts or price reductions), taxes (excluding refunded tax amounts) and expenses directly related to the putting of assets into use as planned.

- For cases where intangible fixed assets are procured by the deferred or installment payment mode, their historical cost shall be reflected according to the spot buying price at the buying time. The difference between the buying price for deferred payment and the spot buying price shall be accounted into the production and business cost according to the payment period, unless such difference is calculated into the historical cost of intangible fixed assets (capitalization) according to the provisions of the accounting standard "Borrowing expenses."

- For intangible fixed assets formed from the exchange, paid with documents related to the capital ownership of the units, their historical cost shall be the reasonable value of documents issued and related to the units� capital ownership.

- The historical cost of intangible fixed assets being the right to use land for definite terms shall be the value of the land use right when the land is assigned or the sum of money payable when lawfully receiving the land use land right from other persons, or the value of the land use right accepted as joint-venture capital contribution.

- The historical cost of intangible fixed assets granted by the State or donated or presented shall be determined according to the initial reasonable value plus (+) the expenses directly related to the putting of such assets into use as planned.

2. All the actually incurred expenses related to the development stage shall be gathered into the production and business cost in the period. From the time the development results are deemed to satisfy the fixed-asset definition and recognition criteria prescribed in the Standard of Intangible Fixed Assets, the expenses incurred at the development stage shall be gathered into Account 241 "Unfinished capital construction" (2412). When the development stage ends, the costs constituting the historical cost of intangible fixed assets at the development stage must be transferred into the Debit side of Account 213 "Intangible fixed assets."

3. In the use process, intangible fixed assets must be depreciated into the production and business cost according to the provisions of the Standard of Intangible Fixed Assets.

4. Intangible fixed asset-related expenses that are incurred after initial recognition must be recognized as production and business cost in the period. If they satisfy simultaneously the following two conditions, they shall be recorded as increase in the historical cost of intangible fixed assets:

- Incurred expenses that are likely to enable intangible fixed assets to create future economic benefits bigger than the initially assessed operation level;

- Expenses that are reliably appraised and closely associated with particular intangible fixed assets.

5. Incurred expenses that bring about future economic benefits to the enterprises, which consist of enterprise establishment expenses, personnel- training expenses, and advertising expenses, that are incurred in the pre-operation time of newly-established enterprises, expenses for the research stage and relocation expenses shall be recognized as production and business cost in the period or be gradually allocated into the production and business cost in the maximum period of 3 years.

6. Expenses related to intangible assets, which have been recognized by the enterprises as expenses for determining business results in the period, shall not be re-recognized into the historical cost of intangible fixed assets.

7. Trademarks, distribution right, name lists of customers and similar items formed within the enterprises shall not be recognized as intangible fixed assets.

8. Intangible fixed assets shall be monitored in detail according to each object recorded as fixed asset in the "Fixed asset register."

Structure and content of reflection of account 213 � intangible fixed assets

The Debit side:

Increased historical cost of intangible fixed assets.

The Credit side:

Decreased historical cost of intangible fixed assets.

The Debit balance:

The historical cost of existing intangible fixed assets at the enterprise.

Account 213 - Intangible fixed assets, consists of 6 class-2 Accounts:

- Account 2131 - Land use right: reflects the value of intangible fixed assets being all the actually spent expenses directly related to the used land, comprising money amounts spent to acquire the land use right, expenses for compensation, ground clearance and ground fill-up (for cases where the land use right is separate from the stage of investment in houses and architectural objects on the land), registration fee (if any)� This account shall not cover expenses for building works on the land.

- Account 2132 - Distribution right: reflects the value of intangible fixed assets being all amounts actually spent by the enterprises to acquire the distribution right.

- Account 2133 - Copyright, patents: reflects the value of intangible fixed assets being all amounts actually spent to acquire copyright or patents.

- Account 2134 - Trademarks: reflects the value of intangible fixed assets being all amounts actually spent to buy trademarks.

- Account 2135 - Computer software: reflects the value of intangible fixed assets being all amounts actually spent by the enterprises to acquire computer software.

- Account 2136 - Licenses and franchise permits: reflects the value of intangible fixed assets being all amounts spent by the enterprises to obtain licenses and franchise permits to carry out relevant jobs, such as exploitation permits, licenses to produce novel products�

- Account 2138 - Other intangible fixed assets: reflects the value of other assorted intangible fixed assets not reflected in the accounts above, such as: copyright, the right to use contracts�

Methods of accounting a number of major economic activities:

1. Accounting intangible fixed asset-purchasing operations:

- For cases where intangible fixed assets are procured for use in the production and trading of goods and/or services subject to VAT calculated by the deduction method, record:

Debit in Account 213 - Intangible fixed assets (The buying price without VAT)

Debit in Account 133 - Deducted VAT (1332)

Credit in Account 112 - Bank deposits; or

Credit in Account 141 - Advance amounts

Credit in Account 331 - Payables to sellers.

- For cases where intangible fixed assets are purchased for use in the production and trading of goods and/or services not subject to VAT, record:

Debit in Account 213 - Intangible fixed assets

Credit in Account 112, 331�

2. For cases where intangible fixed assets are purchased by the mode of deferred or installment payment:

2.1. When intangible fixed assets are purchased and used in the production and trading of goods and/or services subject to VAT calculated by the deduction method, record:

Debit in Account 213 � Intangible fixed assets (Historical cost - according to the spot buying price without VAT)

Debit in Account 242 - Prepaid long-term expenses (interests paid on deferred or installment payments shall be calculated as equal to the difference between the total payable amount minus (-) the spot buying price and input VAT (if any)

Debit in Account 133 - Deducted VAT (1332)

Credit in Account 331 - Payables to sellers (Total payment price).

2.2. When intangible fixed assets are purchased for use in the production and trading of goods and/or services not subject to VAT or subject to VAT calculated by the direct method, record:

Debit in Account 213 - Intangible fixed assets (historical cost � according to the spot buying price with VAT)

Debit in Account 242 - Prepaid long-term expenses (interests paid on deferred or installment payments shall be calculated as equal to the difference between the total payable amount minus (-) the spot buying price)

Credit in Account 331 - Payables to sellers (Total payment price).

2.3. Every period to compute interests paid for the purchase of fixed assets by the mode of deferred or installment payment, and record:

Debit in Account 635 - Financial expenditures

Credit in Account 242 - Prepaid long-term expenses.

2.4. When making payment to the sellers, record:

Debit in Account 331 - Payables to sellers

Credit in Accounts 111 and 112.

3. Intangible fixed assets purchased in the form of exchange

3.1. Exchange of two similar intangible fixed assets:

When receiving similar intangible fixed assets exchanged for similar intangible fixed assets and immediately using them for production and business activities, record:

Debit in Account 213 - Intangible fixed assets (The historical cost of received intangible fixed assets shall be recorded according to the residual value of exchanged intangible fixed assets)

Debit in Account 214 - Wear of fixed assets (2143) (The depreciated value of exchanged fixed assets)

Credit in Account 213 - Intangible fixed assets (The historical cost of exchanged intangible fixed assets).

3.2. Exchange of two dissimilar intangible fixed assets:

- Record exchanged intangible fixed assets as decrease:

Debit in Account 214 - Wear of fixed assets (The depreciated value)

Debit in Account 811 - Other expenses (The residual value of exchanged fixed assets)

Credit in Account 213 - Intangible fixed assets (Historical cost)

- Concurrently reflect the income from exchange of fixed assets and record:

Debit in Account 131 - Receivables from customers (Total payment price)

Credit in Account 711 - Other incomes (Reasonable value of exchanged fixed assets)

Credit in Account 3331 - VAT (33311)(if any).

- Record received intangible fixed assets as increase:

Debit in Account 213 - Intangible fixed assets (Reasonable value of received fixed assets)

Debit in Account 133 - Deducted VAT (1332) (if any)

Credit in Account 131 - Receivables from customers (Total payment price).

For cases where additional sums of money are received or paid, record them as guided at Item 2.4.2 of Part II.

4. The value of intangible fixed assets formed within the enterprises at the development stage:

4.1. When expenses are incurred in the development stage, gather them into the production and business cost in the period or in prepaid long-term expenses, and record:

Debit in Account 242 - Prepaid long-term expenses (where the value is big) or

Debit in Account 642 - Enterprise management costs

Credit in Accounts 111, 112, 152, 153, 331�

4.2. When deeming that the development results satisfy the intangible fixed asset definition and recognition criteria:

a/ Gather expenses that actually incurred in the development stage to constitute the historical cost of intangible fixed assets, and record:

Debit in Account 241 - Unfinished capital construction

Debit in Account 133 - Deducted VAT (1332 - if any)

Credit in Accounts 111, 112, 152, 153, 331�

b/ At the end of the development stage, accountants must determine the total actually incurred expenses that constitute the historical cost of intangible fixed assets, and record:

Debit in Account 213 - Intangible fixed assets

Credit in Account 241 - Unfinished capital construction.

5. When buying intangible fixed assets being the land use right together with houses and/or architectural objects on the land, the value of intangible fixed assets being the land use right and the value of intangible fixed assets being houses and/or architectural objects must be determined separately, and record:

Debit in Account 211 - Tangible fixed asset (The historical cost of houses and architectural objects)

Debit in Account 213 - Intangible fixed assets (The historical cost of the land use right)

Debit in Account 133 - Deducted VAT (1332 - if any)

Credit in Accounts 111, 112, 331�

6. When buying intangible fixed assets and paying them with documents related to the capital ownership of joint-stock companies, the historical cost of such intangible fixed assets shall be the reasonable value of documents issued and related to the capital ownership, record:

Debit in Account 213 - Intangible fixed assets

Credit in Account 411 - Business capital sources (Details of contributed capital and equity surplus. Equity surplus means the difference between the reasonable value and the share par-value).

7. When the enterprises are donated or presented intangible fixed assets and immediately use them for production and business activities:

7.1. Upon receiving donated and presented intangible fixed assets, record:

Debit in Account 213 - Intangible fixed assets

Credit in Account 711 - Other incomes.

For incurred expenses related to donated and presented intangible fixed assets, record:

Debit in Account 213 - Intangible fixed assets

Credit in Accounts 111, 112�

7.2. When calculating the enterprise income tax payable (if any) on the value of donated or presented intangible fixed assets, record:

Debit in Account 421 - Undistributed profits

Credit in Account 333 - Taxes and remittances into the State budget (3334).

7.3. After calculating the enterprise income tax payable (if any) on the value of donated or presented intangible fixed assets, record them as increase in the enterprises� business capital:

Debit in Account 421- Undistributed profits

Credit in Account 411 - Business capital source (Details of other business capital sources).

8. When the enterprises receive contributed joint-venture capital in the form of land use right, on the basis of the land use right-transfer dossiers, record:

Debit in Account 213 - Intangible fixed assets

Credit in Account 411 - Business capital source.

9. Cost-accounting as decrease in intangible fixed assets in the case where research expenses, trade advantages and establishment costs have been accounted into intangible fixed assets before the accounting standards are implemented:

- If the residual value of these intangible fixed assets is small and transferred once into the production and business cost in the period, record:

Debit in Accounts 627, 641 and 642 (Residual value)

Debit in Account 214 - Wear of fixed assets (Depreciated amounts)

Credit in Account 213 - Intangible fixed assets (Historical cost).

- If the residual value of these intangible fixed assets is great and transferred into prepaid long-term expenses for gradual allocation, record:

Debit in Account 242 - Prepaid long-term expenses

Debit in Account 214 - Wear of fixed assets (Depreciated amounts)

Credit in Account 213 - Intangible fixed assets (Historical cost).

10. The cost-accounting of the sale and liquidation of intangible fixed assets shall comply with the regulations on the cost-accounting of the sale and liquidation of tangible fixed asset (see the guidance in Account 211).

2. Additional guidance on the accounting of wear of intangible fixed assets

For cases where at the end of the fiscal year, the enterprises re-consider the amortization duration and the method of amortization of their intangible fixed assets, if they change the amortization level, they should revise the amortized amounts recorded in the accounting books as follows:

- If due to change in the amortization method and the duration of amortization of intangible fixed assets, the amortization level of intangible fixed assets increases as compared with the amounts already depreciated in the year, thus resulting in the increasing amortization difference, record:

Debit in Accounts 627, 641 and 642 (The increasing amortization difference)

Debit in Account 214 - Wear of fixed assets (2143).

- If due to change in the amortization method and the duration of amortization of intangible fixed assets, the amortization level of intangible fixed assets decreases as compared with the amounts already amortized in the year, thus resulting in the decreasing amortization difference, record:

Debit in Account 214 - Wear of fixed assets (2143)

Credit in Accounts 627, 641 and 642 (The decreasing amortization difference).

3. Adding Account 242 - Prepaid long-term expenses

This account is used to reflect expenses that have been actually incurred but related to the production and business results of many accounting years and the transfer of these expenses into the production and business cost of the subsequent accounting years.

Prepaid long-term expenses include:

- Prepaid expenses for the lease of fixed asset operations (land use right, workshops, warehouses, working offices, shops and other fixed assets) in service of business activities in many fiscal years;

- Rents prepaid for many years for infrastructures in service of business activities in many periods;

- Prepaid expenses in service of business activities in many fiscal years;

- Enterprise establishment expenses, advertising expenses incurred in the pre-operation stage;

- Research expenses of great value;

- Expenses for the development stage, which fail to meet the criteria for recognition as intangible fixed asset;

- Expenses for training managerial officials and technical workers;

- Expenses for relocation of business places or reorganization of the enterprises;

- Trade advantages in the cases of enterprise acquisition or enterprise merger of acquisition nature;

- Premiums of assorted insurance (fire and explosion insurance, civil liability insurance for transport means, vehicle body insurance, property insurance�) and assorted fees which the enterprises pay in lump-sum for many accounting years;

- Tools and instruments of big value, which are delivered from store for one-off use and the tools and instruments which are used in business activities for more than one fiscal year and must be gradually allocated to expense-incurring subjects over many years;

- Interests on deferred or installment payments for the purchase of goods, interests on the financial lease of fixed assets;

- Too great fixed asset overhaul expenses paid in lump sum, which must be allocated in many years;

- Other amounts.

Accounting of account 242 should respect the following provisions:

1. To account in Account 242 only expenses that are incurred and related to the operation results in one fiscal year;

2. If the above-listed expenses are only related to the current fiscal year, once they are actually incurred, they shall be immediately recognized into the production and business cost in that fiscal year but not be reflected into Account 242 "Prepaid long-term expenses";

3. The calculation and allocation of prepaid long-term expenses into the production and business cost in each accounting period must be based on the nature and level of each type of expense so as to opt for reasonable methods and criteria;

4. Accountants must monitor in detail each type of prepaid long-term expense already incurred and allocated into the expense-incurring subjects in each accounting period as well as the remaining amounts not yet allocated into expense.

Structure and content of reflection of account 242 - prepaid long-term expenses

The Debit side:

Prepaid long-term expenses incurred in the period

The Credit side:

Prepaid long-term expenses allocated into expenses for production and business activities in the period.

The Debit balance:

Prepaid long-term expenses not yet calculated into the production and business cost of the fiscal year.

Method of accounting some major economic activities:

1. When enterprise establishment expenses, expenses for training employees, advertising expenses incurred in the newly-established enterprises� pre-operation stage, expenses for the research stage and relocation expenses are incurred:

a/ If incurred expenses are not big, recognize all of them into the production and business cost in the period, and record:

Debit in Account 641 - Sale costs (Advertising expenses)

Debit in Account 642 - Enterprise management costs (Establishment expenses, employee-training expenses, research expenses�)

Debit in Account 133 - Deducted VAT (If any)

Credit in Accounts 111, 112, 152, 153, 331, 334�

b/ If incurred expenses are big and must be allocated gradually into production and business costs of many fiscal years, when expenses are incurred and gathered into Account 242 "Prepaid long-term expenses," record:

Debit in Account 242 - Prepaid long-term expenses

Debit in Account 133 - Deducted VAT (If any)

Credit in Accounts 111, 112, 152, 331, 334, 338�

c/ Every period allocate prepaid long-term expenses into the production and business cost, and record:

Debit in Accounts 641, 642

Credit in Account 242 - Prepaid long-term expenses.

2. When paying fixed asset and/or infrastructure rents in advance by the mode of renting for operation in service of business activities in many years, record:

Debit in Account 242 - Prepaid long-term expenses

Debit in Account 133 - Deducted VAT

Credit in Accounts 111, 112�

Every period allocate expenses for renting fixed assets and infrastructure into the production and business cost according to the criterion of reasonable allocation, and record:

Debit in Accounts 635 and 642

Credit in Account 242 - Prepaid long-term expenses.

3. For big-value tools and instruments which are delivered from store for one-off use and must be gradually allocated into the production and business cost or business management costs, the following two allocation methods may be applied:

- Double allocation;

- Multiple allocation.

3.1. Double allocation:

- When delivering tools and instruments, on the basis of delivery cards, record:

Debit in Account 242 - Prepaid long-term expenses

Credit in Account 153 - Tools and instruments.

Concurrently effect the first-time allocation (of 50% of the value of tools and instruments delivered for use) into the production and business cost or management costs, and record:

Debit in Accounts 627, 641 and 642

Credit in Account 242 - Prepaid long-term expenses.

When damage, loss or use expiry is reported according to regulations, accountants shall allocate the residual value of tools and instruments into the production and business or management costs according to the following formula:

Amounts Value of damaged tools Value of recovered Material

allocated for the = ------------------------------ - discarded - compensations

second time 2 materials (if any) (if any)

Accountants shall record:

Debit in Account 152 - Raw materials and materials (Value of recovered discarded materials, if any)

Debit in Account 138 - Other receivables (Material compensations in cash collectible from persons at fault)

Debit in Accounts 627, 641 and 642 (Amounts allocated for the second time to the users)

Credit in Account 242 - Prepaid long-term expenses.

3.2. Multiple allocation:

- When delivering tools, instruments and appliances for use or lease, accountants must base themselves on the value, time and extent of their participation in the use process so as to determine the number of allocation times and the level of expense to be allocated each time for each type of tool or instrument. The base for determining the level of expense to be allocated each time may be the use duration or the volume of products or services traded with the use of such tools in each accounting period.

The cost-accounting method is similar as in the case of double allocation.

In both cases of double allocation and multiple allocation, accountants must monitor in detail each expense to ensure that the total allocated expenses are compatible with the incurred ones and they are allocated to the right expense-incurring subjects.

4. For the purchase of intangible fixed assets by the mode of deferred or installment payment, record it as prescribed in Section 2.1, Part II - Guidance on Accounting of the Standard "Tangible fixed asset."

IV. GUIDANCE ON ACCOUNTING OF THE STANDARD "TURNOVER AND OTHER INCOMES"

1. Correction: To delete the phrase "Payment discounts" in paragraph 06 of the standard "Turnover and other incomes" issued together with the Finance Minister�s Decision No. 149/2001/QD-BTC of December 31, 2001.

2. Accounting of turnover

2.1. Class-5 Account - Turnover:

Class-5 Accounts are used to reflect the entire turnover realized by an enterprise in an accounting period.

Turnover means the total value of economic benefits earned by an enterprise in an accounting period, which arise from normal production and business activities of the enterprise, contributing to augmenting the owner�s capital.

Turnover arising from transactions or events is determined through agreement between the enterprises and buyers or users of assets. It is determined as the reasonable value of received or receivable amounts minus (-) trade discounts, reductions of the price of goods sold and the value of returns of goods sold.

Accounting of this account should respect the following regulations

1. Turnover and costs related to the same transaction must be recognized simultaneously according to the matching principle and the fiscal year.

2. Turnover shall be recognized in the accounting period only if it simultaneously satisfies all conditions for recognition of turnover from goods sale, turnover from service provision, turnover from earned interests, royalties, dividends and distributed profits as prescribed at Points 10, 16 and 24 of the Standard of Turnover and Other Incomes, (Decision No. 149/2001/QD-BTC of December 31, 2001 of the Finance Ministry) and the provisions of the current accounting regime. Any revenues that fail to satisfy the turnover recognition conditions shall not be accounted into turnover accounts.

3. When goods or services are exchanged for goods or services, which are similar in nature and value, such exchange shall not be regarded as a turnover-generating transaction and not recognized as turnover.

4. Turnover (including internal turnover) must be separately monitored according to each type of turnover: Turnover from goods sale, turnover from service provision, turnover from interests, royalties, dividends and distributed profits. Each type of turnover shall then be concretized according to each turnover item, such as turnover from goods sale can be concretized into turnover from sale of products, goods� in order to serve the full and accurate determination of business results according to the requirements on management of production and business activities and the making of reports on the enterprises� business results.

5. If reductions in turnover from goods sale and service provision arise in the accounting period, such as trade discounts, reductions of the price of goods sold, returns of goods sold, they must be separately accounted and shall be deducted from the initially-recognized turnover so as to determine net turnover serving as basis for determining the business results of the accounting period.

6. On principle, at the end of each accounting period, the enterprises must determine the results of their production and business activities. All net turnover realized in the accounting period shall be transferred into Account 911 - Determination of business results. Accounts belonging to the turnover-Account class shall not have period-end balance.

The turnover-account class consists of 6 accounts, divided into 3 groups:

a/ Account 51 group - Turnover, consisting of 03 accounts:

- Account 511 - Turnover from goods sale and service provision;

- Account 512 - Internal turnover;

- Account 515 - Turnover from financial activities.

b/ Account 52 group, consisting of 01 account:

- Account 521 - Trade discounts.

c/ Account 53 group, consisting of 02 accounts:

- Account 531 - Returns of goods sold;

- Account 532 - Reductions of the price of good sold.

2.2. Account 511 - Turnover from goods sale and service provision

a/ To rename Account 511 - "Turnover from goods sale" as Account 511 - "Turnover from goods sale and service provision."

b/ Content of reflection of Account 511 - "Turnover from goods sale and service provision."

This account is used to reflect an enterprise�s turnover from goods sale and service provision in an accounting period of production and business activities from the following transactions and operations:

- Goods sale: Sale of products made by the enterprise and sale of goods bought in;

- Service provision: Performance of jobs already agreed upon in contracts in one or more than one accounting period, such as providing transport and tourism services, leasing fixed assets by the mode of operation leasing�

Turnover from goods sale and service provision is all sums of money already collected or to be collected from turnover-generating transactions and operations such as sale of products and goods, provision of services for customers, including surcharges and charges collected in addition to selling prices (if any).

Where enterprises earn turnover from goods sale and service provision in foreign currencies, they must convert them into Vietnam dong at the actually-applied exchange rate or the average transaction rate on the inter-bank foreign currency market announced by the State Bank of Vietnam at the time of occurrence of the economic operations.

Net turnover from goods sale and service provision which the enterprises achieves in an accounting period may be lower than the initially recognized turnover from goods sale and service provision for the following reasons: The enterprises give trade discounts or reductions of the price of goods sold to customers or sold goods are returned (for they fail to meet the technical specifications and quality conditions inscribed in economic contracts), and the enterprises have to pay special consumption tax or export tax, or VAT by the direct method calculated on turnover from goods sale and service provision actually achieved by the enterprises in an accounting period.

Accounting of this account should respect the following regulations:

1. Account 511 "Turnover from goods sale and service provision" shall reflect only turnover from the quantities of products and/or goods already sold out; already provided services determined as having been consumed in the period, regardless whether such turnover has been collected or will be collected.

2. The accounting of the enterprises� turnover from goods sale and service provision shall abide by the following principles:

- For products, goods and services subject to VAT by the deduction method, the turnover from goods sale and service provision shall be the selling price without VAT;

- For products, goods and services not subject to VAT or subject to VAT by the direct method, the turnover from goods sale and service provision shall be the total payment price;

- For products, goods and services subject to special consumption tax or export tax, the turnover from goods sale and service provision shall be the total payment price (including special consumption tax or export tax);

- Those enterprises that process supplies and/or goods shall only reflect into the turnover from goods sale and service provision the actually earned processing remunerations but not the value of supplies and/or goods received for processing;

- For goods accepted by the enterprises for commissioned agency or consignment sale at the right prices, the sale commissions enjoyed by the enterprises shall be accounted into the turnover from goods sale and service provision.

- Where goods are sold by the mode of deferred or installment payments, the enterprises shall recognize turnover from goods sale according to the spot selling price and recognize into turnover from financial activities interests calculated on the deferred payments according to the time of recognition of turnover.

- For those products and goods already determined as having been consumed but, for quality or technical specification reasons, the buyers refuse to pay for and return them to the sellers or request price reductions and such requests are accepted by the enterprises; or the buyers enjoy trade discounts for buying goods in large quantities, these reductions of turnover from goods sale shall be separately monitored in Account 531 - Returns of goods sold, or Account 532 - Reductions of the price of goods sold, or Account 521 - Trade discounts.

- Where, in a period, the enterprises have recorded sale invoices and received money from the sale of goods but fail to deliver the goods to the buyers at the end of the period, the value of this quantity of goods shall not be regarded as having been consumed and, therefore, not accounted in Account 511 - "Turnover from goods sale and service provision." The amounts already collected from customers shall be credited to Account 131 - "Receivables from customers." After the goods are actually delivered to the buyers, the value of the delivered goods for which payments have been collected in advance shall be accounted into Account 511 - "Turnover from goods sale and service provision," as it now satisfies the turnover recognition conditions.

- For asset-leasing cases where rents have been paid in advance for many years, the turnover from service provision recognized in the fiscal year shall be the rent determined by dividing the total collected rent amount to the number of years of asset leasing.

- For the enterprises that supply products, goods and/or services at the State�s requests, thus enjoy the State�s financial supports and price subsidies according to regulations, the turnover from financial supports and price subsidies shall be the amount officially announced by the State or actually provided. The turnover from financial supports and price subsidies shall be reflected in Account 5114 - Turnover from financial supports and price subsidies.

- The following amounts shall not be reflected in this account:

l The value of goods, supplies, semi-finished products delivered to the outside for processing.

l The value of products, semi-finished products, services provided among member companies of an all-branch accounting company or corporation (products, semi-finished products, internally-consumed services).

l Proceeds from sale and liquidation of fixed assets.

l The value of products and goods consigned for sale; services provided completely for customers, which the buyers have not yet accepted and paid for.

l The value of goods consigned for sale by the mode of sale agency or consignment (not yet determined as having been consumed).

l Other incomes which are not regarded as turnover from goods sale and service provision.

c/ Structure, content of reflection and method of accounting major operations of Account 511 - "Turnover from goods sale and service provision" and the opening of class-2 accounts shall comply with the regulations for Account 511 - "Turnover from goods sale" in the Enterprise Accounting Regime (issued together with Decision No. 1141/TC/QD-CDKT of November 1, 1995 of the Finance Ministry and circulars guiding the amendment and supplementation of the Enterprise Accounting Regime). Particularly for payable VAT amounts calculated by the direct method and arising in the period, they shall be recorded in the Credit side of Account 3331 - "Payable VAT," corresponding to the Debit side of Account 511 "Turnover from goods sale and service provision."

Method of accounting some major economic activities:

1. In the case of goods sale by the mode of deferred and installment payment

a/ For goods subject to VAT by the deduction method:

- When selling goods on deferred or installment payment, record the first-time payment and amounts to be collected for goods sold on deferred or installment payment, record turnover from goods sale and collectible interests:

Debit in Accounts 111, 112 and 131 (Total payment price)

Credit in Account 511 - Turnover from goods sale and service provision (5113 - Spot selling price without VAT)

Credit in Account 333 - Taxes and remittances to the State (3331 - Payable VAT)

Credit in Account 3387 - Unrealized turnover (The difference between the total amount payable according to the selling price for deferred or installment payment and the spot selling price without VAT).

- When actually collecting subsequent payments for the goods sold, record:

Debit in Accounts 111, 112�

Credit in Account 131 - Receivables from customers.

- When recognizing turnover from interests on goods sold on deferred or installment payment in each period, record:

Debit in Account 3387 - Unrealized turnover

Credit in Account 515 - Turnover from financial activities (Interests on deferred or installment payments).

b/ For goods not subject to VAT or subject to VAT by the direct method:

- When selling goods on deferred or installment payment, record the first-time payment and amounts to be collected from goods sold on deferred or installment payment, record turnover from goods sale and collectible interests:

Debit in Accounts 111, 112 and 131

Credit in Account 511 - Turnover from goods sale and service provision (Spot selling price with VAT)

Credit in Account 3387 - Unrealized turnover (The difference between the total amount payable according to the selling price for deferred or installment payment and the spot selling price with VAT).

- When actually collecting subsequent payments for the goods sold, record:

Debit in Accounts 111, 112�

Credit in Account 131 - Receivables from customers.

- When recognizing turnover from interests on goods sold on deferred or installment payment in each period, record:

Debit in Account 3387 - Unrealized turnover

Credit in Account 515 - Turnover from financial activities (Interests on deferred or installment payments).

2. Accounting of payable VAT calculated by the direct method

At period-end, accountants shall compute and determine VAT amounts payable by the direct method on production and business activities, and record:

Debit in Account 511- Turnover from goods sale and service provision

Credit in Account 3331 - Payable VAT.

2.3. Account 3387 - Unrealized turnover

To rename Account 3387 - "Turnover received in advance" as Account 3387 "Unrealized turnover."

This account is used to reflect unrealized turnover of an enterprise in an accounting period.

Unrealized turnover consists of:

- Money amounts received many years in advance for asset lease (operation leasing);

- The difference between the selling price for deferred or installment payment as committed and the spot selling price;

- Interests received in advance when lending capital or buying debt instruments (bonds, bills�).

Accounting of this account should respect the following regulations:

- When selling goods or providing services by the mode of deferred or installment payment, the turnover therefrom shall be recognized according to the spot selling price at the time of turnover recognition.

The spot selling price shall be determined by converting the nominal value of amounts collectible in future into the actual value at the time of turnover recognition at the current interest rate. Interest earned on deferred or installment payment for goods sold is the difference between the selling price for deferred or installment payment and the spot selling price and shall be recognized into Account "Unrealized turnover." Unrealized turnover shall be recognized as turnover in the accounting period according to the provision in paragraph 25(a) of the Standard of "Turnover and Other Incomes."

- When receiving in advance rents for the lease of assets for many years, such rents shall be recognized as unrealized turnover. In subsequent fiscal years, turnover shall be recognized in a way suitable to turnover of each fiscal year.

Structure and content of reflection of account 3387 - unrealized turnover:

The Debit side:

To transfer "Unrealized turnover" into Account "Turnover from goods sale and service provision," or Account "Turnover from financial activities" (interests, royalties, dividends and distributed profits).

The Credit side:

To recognize unrealized turnover arising in the period.

The Credit balance:

Unrealized turnover at the end of the accounting period.

Method of accounting some major economic activities:

1. In case of goods sale by the mode of deferred or installment payment:

a/ For goods sold on deferred or installment payment, which are subject to VAT by the deduction method:

- When selling goods on deferred or installment payment, recognize the turnover from goods sale and service provision in the accounting period according to the spot selling price, record the difference between the selling price for deferred or installment payment and the spot selling price in Account "Unrealized turnover":

Debit in Accounts 111, 112 and 131

Credit in Account 511 - Turnover from goods sale and service provision (according to the spot selling price without VAT)

Credit in Account 3387 - Unrealized turnover (The difference between the selling price for deferred or installment payment and the spot selling price without VAT)

Credit in Account 333 - Taxes and remittances to the State (3331 - Payable VAT).

- Every period, calculate, determine and transfer turnover from interests on deferred or installment payments for goods sold in the period, and record:

Debit in Account 3387 - Unrealized turnover

Credit in Account 515 - Turnover from financial activities.

- When actually collecting money from the goods sold on deferred or installment payment, including the difference between the selling price for deferred or installment payment and the spot selling price, record:

Debit in Accounts 111 and 112.

Credit in Account 131 - Receivables from customers

b/ For goods sold on deferred or installment payment, which are not subject to VAT or subject to VAT by the direct method:

- When selling goods on deferred or installment payment, recognize the turnover from goods sale and service provision of the accounting period according to the spot selling price, the difference between the selling price for deferred or installment payment and the spot selling price shall be recognized as unrealized turnover, and record:

Debit in Accounts 111, 112 and 131

Credit in Account 511 - Turnover from goods sale and service provision (Spot selling price with VAT)

Credit in Account 3387 - Unrealized turnover (The difference between the selling price for deferred or installment payment and the spot selling price with VAT).

- At period-end, determine the payable VAT calculated by the direct method, and record:

Debit in Account 511 - Turnover from goods sale and service provision

Credit in Account 333 - Taxes and remittances to the State (3331 - Payable VAT).

- Every period, calculate, determine and transfer turnover from interests on deferred or installment payments for goods sold, and record:

Debit in Account 3387 - Unrealized turnover

Credit in Account 515 - Turnover from financial activities.

- When actually collecting money from the goods sold on deferred or installment payment, including the interests from goods sale, record:

Debit in Accounts 111 and 112

Credit in Account 131 - Receivables from customers.

2. For activities of lease of assets for which rents have been collected in advance for many years

Turnover of a fiscal year shall be determined by dividing the total rent already collected to the number of years of asset lease. When receiving money prepaid by customers for many accounting periods or years for asset-leasing activities, record:

a/ For units calculating payable VAT by the tax deduction method:

- When receiving money prepaid by customers for asset-leasing activities for many years, record:

Debit in Accounts 111, 112� (Total amount received in advance)

Credit in Account 3387 - Unrealized turnover (According to the price without VAT)

Credit in Account 333 - Taxes and remittances to the State (3331).

Concurrently calculate and transfer turnover of the accounting period, and record:

Debit in Account 3387 - Unrealized turnover (price without VAT)

Credit in Account 511 - Turnover from goods sale and service provision (Turnover of the accounting period).

- For the subsequent accounting period, calculate and transfer the turnover of the subsequent accounting period, and record:

Debit in Account 3387 - Unrealized turnover

Credit in Account 511 - Turnover from goods sale and service provision (Turnover of the accounting period).

- For money amounts to be returned to customers for non-performance of asset-lease service provision contracts (if any), record:

Debit in Account 3387 - Unrealized turnover (price without VAT)

Debit in Account 531 - Returns of goods sold (for cases where turnover was recorded in the period according to the price without VAT)

Debit in Account 3331 - Payable VAT (Money amounts returned to the lessees for VAT on non-performed asset-leasing activities)

Credit in Accounts 111, 112, 3388� (Total amount returned).

b/ For units calculating payable VAT by the direct method:

- When receiving money prepaid by customers for asset-leasing activities for many years, record:

Debit in Accounts 111, 112� (Total amount received beforehand)

Credit in Account 3387 - Unrealized turnover (Total amount received beforehand).

Concurrently calculate and transfer turnover of the accounting period in which money has been collected, and record:

Debit in Account 3387 - Unrealized turnover

Credit in Account 511 - Turnover from goods sale and service provision.

- For the subsequent accounting period, calculate and transfer the turnover of the subsequent accounting period, and record:

Debit in Account 3387 - Unrealized turnover

Credit in Account 511 - Turnover from goods sale and service provision

- At the end of the accounting period, calculate and reflect the VAT payable by the direct method, and record:

Debit in Account 511 - Turnover from goods sale and service provision

Credit in Account 3331 - Payable VAT.

- For money amounts to be returned to customers for non-performance of asset-lease service provision contracts (if any), record:

Debit in Account 3387 - Unrealized turnover

Credit in Accounts 111, 112 � (Total returned amount).

2.4. To rename Account 512 - "Turnover from internal sale" as Account 512 - "Internal turnover."

This account is used to reflect turnover from the quantities of products, goods and services consumed within the enterprises.

The content, structure, principles and methods of accounting major economic operations reflected in this account shall be unchanged as prescribed in the Enterprise Accounting Regime (issued together with Decision No. 1141).

2.5. To add Account 515 - Turnover from financial activities

This account is used to reflect turnover from interests, royalty, dividends, distributed profits and turnover from other financial activities of the enterprises.

Turnover from financial activities consists of:

- Interests: Loan interests, deposit interests, interests from the sale of goods on deferred or installment payment, interests from bond and bill investments, trade discounts earned from the sale of goods and services; interests from financial leasing�;

- Incomes from asset lease, letting other persons use assets (patents, trademarks, copyright, computer software�);

- Dividends, distributed profits;

- Incomes from activities of investment and trading in short-term and long-term securities;

- Incomes from transfer or lease of infrastructures;

- Incomes from other investment activities;

- Interest gains from the sale of foreign currencies, interests from the exchange rate difference;

- Interest gains from capital transfer;

- �

Accounting of this account should respect the following regulations:

- Turnover from financial activities reflected in Account 515 consists of turnovers from interests, royalty, dividends and distributed profits and other financial activities regarded as having been implemented in the period, regardless where such turnovers have been actually collected or will be collected.

- For incomes from activities of trading in securities, the difference between the higher selling prices and the buying prices, interests from bonds, bills or share certificates (without reflecting the total money amount collected from the sale of securities) shall be recognized as turnover.

- For incomes from activities of trading in foreign currencies, the interest difference between the buying price and the selling price of foreign currencies shall be recognized as turnover.

- For investment interests received from investments in share certificates and bonds, only the interest amounts of the periods in which the enterprises repurchase these investment shall be recognized as turnover arising in such periods; for investment interests earned from accrued investment interests before the enterprises re-purchase such investments, they shall be recorded as decrease in the value of the investment in those bonds or share certificates;

- For incomes from activities of dealing in real estates, the total proceeds from the sale of real estates shall be recognized as turnover.

- For activities of leasing infrastructures, the turnover from goods sale shall be recognized when the hand-over of land to the customers in the field has been completed according to the value of the land area handed over at the spot price.

Structure and content of reflection of account 515 - turnover from financial activities

The Debit side:

- The payable VAT amount calculated by the direct method (if any).

- To transfer net turnover from financial activities into Account 911 - "Determination of business results."

The Credit side:

Turnover from financial activities arises in the period.

Account 515 shall have no period-end balance.

Methods of accounting some major economic activities

1. For reflecting turnover being dividends, distributed profits arising in the period from activities of contributing equity capital and/or joint-venture capital, record:

Debit in Accounts 111, 112, 138, 152, 156, 133�

Debit in Account 221 - Long-term securities investment (Receipt of dividends in the form of share certificates)

Debit in Account 222 - Joint-venture capital contribution (Incomes added to capital contributed to joint ventures)

Credit in Account 515 - Turnover from financial activities.

2. Method of accounting securities investment activities:

- When buying short-term and long-term investment securities, on the basis of actual buying expenses, record:

Debit in Accounts 121, 221�

Credit in Accounts 111, 112, 141�

- Every period, compute and collect interests on bills and bonds or receive notices on enjoyed dividends:

l In case of not receiving interests but using them for buying more bonds, bills and/or share certificates, record

Debit in Account 121 - Short-term securities investment

Debit in Account 221 - Long-term securities investment

Credit in Account 515 - Turnover from financial activities.

l In case of receiving interests in cash, record:

Debit in Accounts 111, 112�

Credit in Account 515 - Turnover from financial activities.

l In cases where the enterprises receive investment yields, those accrued before they re-purchase such investments, the enterprises must allocate this yield amount. Only the yield portion earned in the periods after the enterprises repurchase these investments shall be recognized as turnover from financial activities. For the yield amount accrued before the enterprises re-purchase such investments, it shall be recorded as decrease in the value of these bond and/or share certificate investments, record:

Debit in Accounts 111 and 112 (Total yields earned)

Credit in Account 121 - Short-term securities investment (The accrued investment yield amount before the enterprises re-purchase the investments)

Credit in Account 221 - Long-term securities investment (The accrued investment yield before the enterprises re-purchase the investments)

Credit in Account 515 - Turnover from financial activities (the yield amount in the periods after the enterprise repurchase these investments).

l Every period, to receive interests on share certificates and bonds (if any), and record:

Debit in Accounts 111, 112; or

Debit in Account 131 - Receivables from customers (Money not yet received immediately)

Credit in Account 515 - Turnover from financial activities

- When transferring short-term and long-term securities, on the basis of the securities-selling price:

l In case of profit, record:

Debit in Accounts 111, 112, 131� (According to the payment price)

Credit in Account 121 - Short-term securities investment (The capital value)

Credit in Account 221 - Long-term securities investment (The capital value)

Credit in Account 515 - Turnover from financial activities (Profit from the sale of securities).

- In case of loss, record:

Debit in Accounts 111, 112 and 131 (Total payment price)

Debit in Account 635 - Financial expenditures (Loss from the sale of securities)

Credit in Account 121 - Short-term securities investment (The capital value)

Credit in Account 221 - Long-term securities investment (The capital value).

- When recovering or paying for short-term securities, record:

Debit in Accounts 111 and 112 (The payment price)

Credit in Account 121 - Short-term securities investment (The capital value)

Credit in Account 515 - Turnover from financial activities.

3. Accounting of the sale of foreign currencies

- In case of profit, record:

Debit in Accounts 111 (1111), 112 (1121) (Total payment price - Actual selling rate)

Credit in Accounts 111 (1112), 112 (1122) (According to the exchange rate in the accounting book)

Credit in Account 515 - Turnover from financial activities (The difference between the higher actual selling rate and the exchange rate recorded in the accounting books),

- In case of loss, record:

Debit in Accounts 111 (1111), 112 (1121) (Total payment price - Actual exchange rate applicable to the sale)

Debit in Account 635 - Financial expenditure (Loss amount) (The difference between the higher exchange rate in the accounting book and the exchange rate actually applied in the sale)

Credit in Accounts 111 (1112), 112 (1122) (According to the exchange rate in the accounting books).

4. Accounting of activities of investment in real estate dealing:

- When buying real estates, record:

Debit in Account 228 - Other long-term investments; or

Debit in Account 241 - Unfinished capital construction (if bought through capital construction investment)

Debit in Account 133 - Deducted VAT (if any) (For enterprises paying VAT by the deduction method).

Credit in Accounts 111, 112, 331�

- For expenses directly related to real-estate investment activities, record:

Debit in Account 241 - Unfinished capital construction

Debit in Account 133 - Deducted VAT (if any)

Credit in Accounts 111, 112�

- When transferring expenses upon completion of real estate investment, record:

Debit in Account 228 - Other long-term investments

Credit in Account 241 - Unfinished capital construction.

- When selling real estates:

l For total proceeds earned from the sale of real estates, record:

Debit in Accounts 111, 112, 131 (Total payment amount)

Credit in Account 515 - Turnover from financial activities

Credit in Account 3331 - Payable VAT (33311) (if any).

l For the value of the investment in real estates already sold, record:

Debit in Account 635 - Financial expenditures

Credit in Account 228 - Other long-term investments.

l For expenses directly related to activities of selling real estates, record:

Debit in Account 635 - Financial expenditures

Debit in Account 133 - Deducted VAT (if any)

Credit in Accounts 111, 112�

5. Accounting of activities of lending capital for earning interests:

- When lending capital for earning interests, record:

Debit in Account 128 - Other short-term investments (if giving short-term loans); or

Debit in Account 228 - Other long-term investments (if giving long-term loans)

Credit in Accounts 111, 112�

- Every period, calculate and determine the loan interests collectible in the period according to the loan contracts, and record:

Debit in Accounts 111 and 112 (if interests are collected immediately);

Debit in Account 131 - Receivables from customers (if interests are not received immediately)

Credit in Account 515 - Turnover from financial activities.

- For deposit interests arising and collected in the period, record:

Debit in Accounts 111 and 112 (if interests are collected immediately)

Credit in Account 515 - Turnover from financial activities.

6. Accounting of payment discounts:

For payment discounts enjoyed thanks to the early payment for the purchase of goods, which are accepted by the sellers, record:

Debit in Account 331 - Payables to sellers

Credit in Account 515 - Turnover from financial activities.

7. Accounting of turnover from the lease of infrastructures:

For activities of dealing in the lease of infrastructures, the turnover shall be recognized according to each leasing term, or when the whole land area is handed over in the field to the customers the turnover shall be recognized according to the value of the land area already handed over and paid in lump sum or at the spot selling price:

- For turnover from the lease of infrastructures subject to VAT by the deduction method, record:

Debit in Accounts 111, 112, 131�

Credit in Account 515 - Turnover from financial activities (if collected according to each leasing term)(The selling price without VAT)

Credit in Account 3331 - Payable VAT.

- For turnover from the lease of infrastructures not subject to VAT or subject to VAT by the direct method, record:

Debit in Accounts 111, 112�

Credit in Account 515 - Turnover from financial activities (Total payment price according to each leasing term)

8. Accounting of the exchange rate difference:

l At the end of the accounting period, transfer the exchange rate difference arising in the period into turnover from financial activities (after offsetting the increasing exchange rate difference with the decreasing exchange rate difference arising in the period), and record:

Debit in Account 413 - Exchange rate difference

Credit in Account 515 - Turnover from financial activities.

9. At the end of the accounting period, compute and determine the payable VAT amount calculated by the direct method on financial activities, and record:

Debit in Account 515 - Turnover from financial activities

Credit in Account 3331 - Payable VAT.

10. At period-end, transfer net turnover from financial activities arising in the period to Account 911 "Determination of business results," and record:

Debit in Account 515 - Turnover from financial activities

Credit in Account 911 - Determination of business results.

3. To add Account 521 - Trade discounts

This account is used to reflect trade discounts that the enterprises already reduce or pay to the goods buyers who have bought goods (products or goods) and/or services in large quantities according to the agreement on trade discounts already inscribed in the trading economic contracts or goods purchase and sale commitments.

Accounting of this account should respect the following regulations:

- To account into this account only trade discounts that the buyers are entitled to and have been given in the period according to the trade discount policy adopted by the enterprises.

- Where in order to achieve the quantity of goods eligible for a discount the buyers have to buy goods many times, this trade discount shall be recorded as decrease in the selling price inscribed in the last "(added value invoice" or "sale invoice." Where the buyers discontinue buying goods or where the trade discount the buyers are entitled to is bigger than the proceeds from the goods sale inscribed in the last invoice, such trade discount must be paid in cash to the buyers. Trade discounts in these cases shall be accounted in Account 521.

- Where the buyers purchase large quantities of goods and, therefore, enjoy trade discounts and the selling price inscribed in invoices is the reduced price (less trade discounts), such trade discounts must not be accounted in Account 521. Turnover from goods sale shall be reflected according to the price minus trade discounts.

- Trade discounts already given must be monitored in detail according to each customer and each category of goods sold, such as sold goods (products, goods), services.

- In the period, actually-arising trade discounts shall be debited to Account 521 - Trade discounts. At period-end, trade discounts shall be transferred into Account 511 - "Turnover from goods sale and service provision" so as to determine the net turnover from the volumes of products, goods and/or services actually realized in the accounting period.

Structure and content of reflection of account 521 - trade discounts

The Debit side:

Trade discounts already accepted for payment to customers.

The Credit side:

To transfer all trade discounts into Account "Turnover from goods sale and service provision" so as to determine the net turnover of the accounting period.

Account 521 - Trade discounts, shall have no end-period balance.

Account 521 - Trade discount, consists of 3 class-2 accounts:

- Account 5211 - Goods discounts: Reflecting all the trade discount money (calculated on the quantities of goods sold) offered to the goods buyers.

- Account 5212 - Finished product discounts: Reflecting all the trade discount money calculated on the quantities of products sold to the finished-product buyers.

- Account 5213 - Service discounts: Reflecting all the trade discount money calculated on the volume of services already provided for the service buyers.

Methods of accounting some major economic activities

1. For reflecting trade discounts actually arising in the period, record:

Debit in Account 521 - Trade discounts

Debit in Account 3331 - Deducted VAT

Credit in Accounts 111, 112�

Credit in Account 131 - Receivables from customers.

2. At period-end, transfer the trade discount money already accepted for the buyers into the turnover account, and record:

Debit in Account 511 - Turnover from goods sale and service provision

Credit in Account 521 - Trade discounts.

4. To supplement the content of reflection and guide the accounting of some economic operations related to Account 632 - Cost of goods sold

4.1. To supplement the structure and content of reflection of Account 632 - "Cost of goods sold" as follows:

The Debit side:

- To reflect the cost of products, goods and/or services already consumed in the period.

- To reflect material and raw-material costs and labor costs spent in excess of the normal level. Unallocated fixed general production costs shall not be calculated into the value of inventory but into the cost of goods sold of the accounting period.

- To reflect losses of inventory after subtracting (-) the compensations paid by individuals at fault.

- To reflect the self-construction and/or self-making cost in excess of the normal level, which are not calculated into the historical cost of self-constructed or self-made tangible fixed assets already finished.

- To reflect the difference between the inventory price decrease reserve to be set up in the current year, which is bigger than the reserve set up in the previous year.

The Credit side:

- To reflect the amounts re-included in the inventory price decrease reserve at the end of the fiscal year (December 31) (The difference between the reserve to be set up in the current year, which is smaller than the reserve set up in the previous year).

- To transfer the cost of products, goods and/or services already consumed in the period into Account 911 - "Determination of business results."

Account 632 "Cost of goods sold" shall have no period-end balance.

4.2. Methods of accounting some economic operations related to the supplementation of the content of reflection in Account 632 - Cost of goods sold

a/ Where the quantity of products actually turned out is lower than the normal capacity, accountants must compute and determine the fixed general production costs allocated into the processing cost of each product unit according to the normal capacity level. The unallocated fixed general production costs (the difference between the bigger total fixed general production costs actually arising and the fixed general production costs calculated into the product price, shall not be calculated into the product price) shall be recognized into the cost of goods sold in the period, and record:

Debit in Account 632 - Cost of goods sold

Credit in Account 154 - Incomplete production and business expenses.

b/ For reflecting inventory losses after subtracting (-) the compensations paid by individuals at fault, record:

Debit in Account 632 - Cost of goods sold

Credit in Accounts 152, 153, 156, 138 (1381)�

c/ For reflecting the fixed assets self-construction or self-making costs in excess of the normal level, which must not be calculated into the historical cost of finished tangible fixed asset, record:

Debit in Account 632 - Cost of goods sold

Credit in Account 241 - Incomplete capital construction expenses (for self-construction)

Credit in Account 154 - Incomplete production and business expenses (for self-making).

d/ Accounting of amounts deducted for or re-included into the inventory price decrease reserve at the end of the fiscal year (December 31) (Because the reserve to be set up in the current year is bigger or smaller than the previous year�s reserve)

At the end of the fiscal year, the enterprises shall base themselves on the inventory price decrease situation by December 31 to calculate the inventory price decrease reserve to be set up and compare it with the previous year�s figure, then determine the difference to be additionally set up or reduced (if any):

- In the case where the inventory price decrease reserve to be set up in the current year is bigger than the inventory price decrease reserve set up at the end of the previous year�s accounting period, the bigger difference shall be additional set up, and record:

Debit in Account 632 - Cost of good sold

Credit in Account 159 - Inventory price decrease reserve.

- In the case where the inventory price decrease reserve to be set up in the current year is smaller than the inventory price decrease reserve set up at the end of the previous year�s accounting period, the smaller difference shall be re-included, and record:

Debit in Account 159 - Inventory price decrease reserve

Credit in Account 632 - Cost of goods sold.

5. To add Account 635 - Financial expenditures

This account reflects expenses for financial activities, including expenses or losses related to financial investment activities, expenses for lending and borrowing capital, expenses for joint-venture capital contribution, losses in the transfer of short-term securities, expenses for securities-selling transactions�; amounts appropriated and re-included into the securities price decrease reserve, other investments; losses due to the foreign exchange rate difference and sale of foreign currencies,�

Structure and content of reflection of account 635 - financial expenditures

The Debit side:

- Expenses for financial activities;

- Losses due to the liquidation of short-term investments;

- Losses from the foreign exchange rate difference actually arising in the period and the exchange rate difference due to re-assessment of the period-end balance of long-term receivable and payable amounts of foreign-currency origin;

- Losses arising from the sale of foreign currencies;

- The securities investment price decrease reserve;

- Expenses for transferred land, lease of infrastructures, already determined as having been consumed.

The Credit side:

- Amounts re-included into the securities investment price decrease serve;

- At the end of the accounting period, to transfer all financial expenditures and losses arising in the period so as to determine the results of business activities.

Account 635 - "Financial expenditures" shall have no period-end balance.

Methods of accounting some major economic activities:

1. For reflecting the expenses or losses related to financial investment activities, record:

Debit in Account 635 - Financial expenditures

Credit in Accounts 111 and 112; or

Credit in Account 141 - Advance amounts

Credit in Accounts 121, 128, 221, 222�

2. For paid and payable loan interests, record:

Debit in Account 635 - Financial expenditures

Credit in Accounts 111, 112, 341, 311, 335�

3. When expenses related to securities-selling activities are incurred, record:

Debit in account 635 - Financial expenditures

Credit in Accounts 111, 112, 141�

4. When expenses are incurred for real estate-dealing activities, record:

Debit in Account 635 - Financial expenditures

Credit in Accounts 111, 112, 141�.

5. For the value of the capital invested in real estates already sold, record:

Debit in Account 635 - Financial expenditures

Credit in Account 228 - Other long-term investments.

6. When expenses for activities of lending capital, trading in foreign currencies are incurred, record:

Debit in Account 635 - Financial expenditures

Credit in Accounts 111, 112, 141�.

7. At the end of the fiscal year, the enterprises shall base themselves on the situation of short-term and long-term securities investment price decrease, and the existing short-term and long-term investments up to December 31 to calculate the price decrease reserve to be set up for these short-term and long-term investments, compare it with the price decrease reserve set up in the previous year (if any), then determine the difference to be additionally set up or to be reduced (if any):

- For cases where the short-term and long-term securities investment price decrease reserve to be set up in the current year is bigger than that set up at the end of the previous accounting year, thus resulting in the bigger difference, record:

Debit in Account 635 - Financial expenditures

Credit in Account 129 - Short-term investment price decrease reserve

Credit in Account 229 - Long-term investment price decrease reserve

- In cases where the short-term and long-term investment price decrease reserve to be set up in the current year is smaller than that set up at the end of the previous accounting year, thus resulting in the difference to be re-included, record:

Debit in Account 229 - Long-term investment price decrease reserve

Debit in Account 129 - Short-term investment price decrease reserve

Credit in Account 635 - Financial expenditures.

8. For payment discounts offered to the buyers of goods and/or services, record:

Debit in Account 635 - Financial expenditures

Credit in Accounts 131, 111, 112�

9. At the end of the accounting period, after offsetting the increasing and decreasing exchange rate differences arising in the period, if the exchange rate difference is a decrease (Debit balance of Account 413) and transferred into financial expenditures in the period, record:

Debit in Account 635 - Financial expenditures

Credit in Account 413 - Exchange rate difference.

10. The exchange rate difference due to the re-appraisal of the period-end balance of long-term receivable and payable amounts of foreign-currency origin:

- For long-term receivable amounts, if the average transaction exchange rate on the inter-bank foreign currency market, announced by the State Bank at the time of making financial statements, is lower than the exchange rate currently reflected in the accounting books of long-term receivable accounts of foreign currency, record the exchange rate difference:

Debit in Account 635 - Financial expenditures

Credit in Account 131 - Receivables from customers (Long-term receivables of foreign-currency origin).

- For long-term payable amounts, if the average transaction exchange rate on the inter-bank foreign currency market, announced by the State Bank at the time of making financial statements, is higher than the exchange rate reflected in the accounting books of the period-end foreign currency balance of long-term payable accounts, record the exchange rate difference:

Debit in Account 635 - Financial expenditures

Credit in Account 341 - Long-term loans (of foreign-currency origin)

Credit in Account 342 - Long-term debts (of foreign-currency origin).

11. For losses arising from the sale of foreign currencies, record:

Debit in Accounts 111 and 112 (Vietnam dong) (at the selling rate).

Debit in Account 365 - Financial expenditures (losses - if any)

Credit in Accounts 111 and 112 (of foreign-currency origin) (at the exchange rate in the accounting books).

12. For expenses for transferred land, lease of infrastructures, already determined as having been consumed, record

Debit in Account 365 - Financial expenditures

Credit in Account 228 - Other long-term investment expenses.

13. At period-end, transfer all financial expenditures arising in the period into Account 911 "Determination of business results," and record:

Debit in Account 911 - Determination of business results

Credit in Account 635 - Financial expenditures.

6. To delete, change the names and identification numbers of some accounts of classes 7 and 8

- To delete Account 711 - "Incomes from financial activities" and Account 811 - "Expenses for financial activities";

- To change the name and identification number of Account 721 -"Irregular incomes" into Account 711 "Other incomes";

- To change the name and identification number of Account 821 -"Irregular expenses " into Account 711 "Other expenses."

7. To amend and supplement the content of the 7-class accounts - Other incomes

This class of accounts reflects other incomes from activities other than turnover-generating activities of the enterprises.

This class of accounts shall reflect only incomes but not expenses. Therefore, relevant amounts arising in an accounting period shall be reflected in the Credit side of accounts of class 7; at period-end they shall be all transferred into Account 911 "Determination of business results" and there will be no balance.

Class-7 account - Other incomes, consists of 1 account:

- Account 711 - Other incomes

The content of other incomes is prescribed in paragraph 30 of the Standard "Turnover and other incomes."

Other incomes of enterprises include:

- Incomes from the sale and liquidation of fixed assets;

- Fines collected from customers for their contractual breaches;

- Collected bad debts that had been written off;

- Taxes refunded from the State budget;

- Payable debts whose creditors are unidentifiable;

- Pecuniary bonuses from customers, related to the consumption of goods, products and services and not calculated into turnover (if any);

- Incomes in the form of gifts and presents in cash and in kind offered by organizations and individuals to the enterprises;

- Previous years� business incomes which have been omitted or forgotten to be recorded in the accounting books and now found out�

Structure and content of reflection of account 711 - other incomes

The Debit side:

- Payable VAT amounts (if any) calculated by the direct method on other incomes (if any) (at enterprises paying VAT by the direct method).

- At the end of the accounting period, to transfer other incomes in the period into Account 911 "Determination of business results."

The Credit side:

Other incomes arising in the period.

Account 711 - "Other incomes" shall have no period-end balance.

Methods of accounting some major economic activities

1. Method of accounting fixed asset-sale and liquidation operations:

- Recording as decrease liquidated and sold fixed assets:

Debit in Account 214 - Wear of fixed assets (The value of wear)

Debit in Account 811 - Other expenses (Residual value)

Credit in Account 211 - Tangible fixed asset (Historical cost)

Credit in Account 213 - Intangible fixed assets (Historical cost).

- For expenses incurred for fixed assets liquidation and sale activities (if any), record:

Debit in Account 811 - Other expenses

Debit in Account 133 - Deducted VAT (if any)

Credit in Accounts 111, 112, 141, 331 � (Total payment price).

- Reflecting other incomes from fixed assets liquidation and sale:

+ For enterprises paying VAT by the deduction method, record:

Debit in Accounts 111, 112 and 131 (Total payment price)

Credit in Account 711 - Other incomes (Incomes without VAT)

Credit in Account 3331 - Payable VAT.

+ For enterprises paying VAT by the direct method, for incomes from fixed asset liquidation and sale, record:

Debit in Accounts 111, 112 and 131 (Total payment price)

Credit in Account 711 - Other incomes (Total payment price).

- Recording payable VAT amounts calculated by the direct method,:

Debit in Account 711 - Other incomes

Credit in Account 3331 - Payable VAT.

2. Reflecting fines collected from customers for their contractual breaches:

- When collecting fines from customers for their breaches of economic contracts, record:

Debit in Accounts 111, 112�

Credit in Account 711 - Other incomes.

- For cases where the units which have paid escrows or deposits breach economic contracts already signed with the enterprises are fined according to the agreement in economic contracts:

l For fines deducted from escrowed or deposited money amounts, record:

Debit in Account 338 - Other payables and remittables (for short-term escrows and deposits)

Debit in Account 344 - Receipt of long-term escrows and deposits (for long-term escrows and deposits)

Credit in Account 711 - Other incomes.

l When actually returning escrows and deposits to the depositors, record:

Debit in Accounts 338 and 344 (With fines already deducted) (if any)

Credit in Accounts 111 and 112.

3. Reflecting insurance indemnities paid by insurance organizations, record:

Debit in Accounts 111, 112�

Credit in Account 711 - Other incomes.

- For expenses related to the handling of losses in the insured cases, record:

Debit in Account 811 - Other expenses

Debit in Account 133 - Deducted VAT (if any)

Credit in Accounts 111, 112, 152�

4. Accounting of bad receivables which had been written off but now collected

- When there are decisions permitting the remission of bad receivable debts which are irrecoverable, record:

Debit in Account 139 - Reserve for bad receivables

Debit in Account 642 - Enterprise management costs (The difference between the bigger bad receivable debts already written off and the reserve already set up)

Credit in Account 131 - Receivables from customers.

Concurrently debit Account 004 "Bad debts already handled."

- For bad receivables already written off, if they are recovered later, accountants shall base themselves on the actual value of recovered debts to record:

Debit in Accounts 111, 112�

Credit in Account 711 - Other incomes.

Concurrently credit Account 004 "Bad debts already handled."

5. For payable debts which creditors do not claim and are included in other incomes, record:

Debit in Account 331 - Payables to sellers; or

Debit in Account 338 - Other payables and remittables.

Credit in Account 711 - Other incomes

6. For cases of reduction and reimbursement of payable VAT:

- If the reduced VAT amounts are subtracted from the VAT amounts payable in the period, record:

Debit in Account 3331 - Payable VAT

Credit in Account 711 - Other incomes.

- If the VAT amounts are reimbursed in cash from the State budget, record:

Debit in Accounts 111, 112�

Credit in Account 711 - Other incomes.

7. For previous years� business incomes which had been omitted or forgotten to be recorded in the accounting books and now found out, record:

Debit in Accounts 111, 131�

Credit in Account 711 - Other incomes.

8. At the end of the accounting period, to transfer other incomes arising in the period into Account 911 "Determination of business results" and record:

Debit in Account 711 - Other incomes

Credit in Account 911 - Determination of business results.

8. To amend and supplement the content of class-8 account - Other expenses

This class of accounts reflects expenses for activities other than turnover-generating production and business activities of the enterprises.

Other expenses are losses caused by events or operations which are separate from normal activities of the enterprises; or possibly expenses omitted in the previous years.

In the period this class of accounts always reflects amounts arising in the Debit side, which, at period-end, are transferred into Account 911 "Determination of business results," and has no balance.

Class-8 account - Other expenses, consists of 01 account:

- Account 811 - Other expenses

- This account reflects expenses for events or operations separate from normal activities of the enterprises.

Other expenses that are incurred include:

- Expenses for fixed assets liquidation and sale and residual value of liquidated and sold fixed assets (if any);

- Fines for breaches of economic contracts;

- Tax fines, tax amounts that are retrospectively collected.

- Expenses that are wrongly accounted or omitted when recording accounting books;

- Other expenses.

Structure and content of reflection of account 811 - other expenses

The Debit side:

Other expenses that are incurred.

The Credit side:

At the end of the accounting period, to transfer all other expenses incurred in the period to Account 911 "Determination of business results."

Account 811 shall have no period-end balance.

Methods of accounting some major economic activities

1. When other expenses are incurred, such as expenses for overcoming losses caused by risks in business activities (typhoons, floods, fires, explosions�), record:

Debit in Account 811 - Other expenses

Credit in Accounts 111, 112, 141�

2. Methods of accounting fixed asset sale and liquidation operations:

- Collecting proceeds from the fixed asset sale and liquidation:

Debit in Accounts 111, 112 and 131

Credit in Account 711 - Other incomes

Credit in Account 3331 - Payable VAT (33311)(if any).

- Reflecting the residual value of fixed assets and recording as decrease sold or liquidated fixed assets used in production and business, record:

Debit in Account 214 - Wear of fixed assets (The value of wear)

Debit in Account 811 - Other expenses (Residual value)

Credit in Account 211 - Tangible fixed asset (Historical cost)

Credit in Account 213 - Intangible fixed assets (Historical cost).

- Expenses incurred for fixed asset sale and liquidation activities:

Debit in Account 811 - Other expenses

Debit in Account 133 - Deducted VAT (1331)(if any)

Credit in Accounts 111, 112, 141�

3. Where the tax-paying enterprises make mistakes in the declaration of export goods and have to pay tax arrears for one year, counted retrospectively from the date of checking and detection of such mistakes, for the export tax amount to be retrospectively collected, record:

Debit in Account 511 - Turnover from goods sale and service provision (if turnover from export goods is generated in the fiscal year)

Debit in Account 811 - Other expenses (if no turnover from export goods is generated in the accounting year)

Credit in Account 3333 - Export and import taxes (Details of export tax).

4. For accounting fines for breaches of economic contracts, tax fines and retrospectively-collected tax amounts, record:

Debit in Account 811 - Other expenses

Credit in Accounts 111 and 112; or

Credit in Account 333 - Taxes and remittables to the State

Credit in Account 338 - Other payables and remittables.

5. At the end of the accounting period, to transfer all other expenses incurred in the period to determine business results, and record:

Debit in Account 911 - Determination of business results

Credit in Account 811 - Other expenses.

9. Accounting of the bad receivable reserve

a/ At the end of the accounting period, the enterprises� accountants shall base themselves on the receivable debts which have been determined as uncertain to be recovered (Bad receivable debts) to compute and determine the bad receivable reserve to be set up. If the bad receivable reserve to be set up in the current year is bigger than the unused balance of the bad receivable reserve set up at the end of the previous accounting period, the bigger difference shall be accounted as cost, record;

Debit in Account 642 - Enterprise management costs

Credit in Account 139 - Bad receivable reserve.

b/ If the bad receivable reserve to be set up in the current year is smaller than the unused balance of the bad receivable reserve set up at the end of the previous accounting period, the difference shall be re-included and recorded as cost decrease, record;

Debit in Account 139 - Bad receivable reserve

Credit in Account 642 - Enterprise management costs (Details of amounts re-included into the bad receivable reserve).

c/ For bad receivable debts which have been determined as irrecoverable, they shall be allowed to be written off. The remission of bad receivables must comply with the current financial regime. On the basis of the decisions to write off bad receivable debts, record:

Debit in Account 139 - Bad receivable reserve (if such reserve has been set up)

Debit in Account 642 - Enterprise management costs

Credit in Account 131 - Receivables from customers

Credit in Account 138 - Other receivables.

Concurrently debit Account 004 "Bad debts already handled" (Off-balance sheet account).

d/ For bad receivables already written off, if they are later recovered, accountants shall base themselves on the actual value of recovered debts to record:

Debit in Accounts 111 and 112

Credit in Account 711 - Other incomes.

Concurrently credit Account 004 "Bad debts already handled" (Off-balance sheet account).

V. GUIDANCE ON AMENDMENTS AND SUPPLEMENTS TO THE FINANCIAL REPORT REGIME

1. The accounting balance sheet

To supplement Section V - Criterion "Prepaid long-term expenses" to Part B "Fixed assets, long-term investments" (Code 241).

This criterion is used to reflect prepaid long-term expenses already spent but not yet allocated into production and business costs at the end of the reporting period.

Data to be recorded in the criterion "Prepaid long-term expenses" shall be based on the Debit balance of Account 242 "Prepaid long-term expenses" at the end of the reporting period.

The form of "Accounting balance sheet," after being revised and supplemented, is prescribed in Appendix No. 01 to this Circular.

2. Business result reports

To supplement and revise Part I - Profits and losses, of business result reports - B02-DN (issued together with Decision No. 167/2000/QD-BTC of October 25, 2000 of the Finance Ministry).

2.1. Forms

Part I - Profits and losses, of business result reports - B02 -DN is prescribed in form B02-DN below:

The Ministry, Corporation:�.

Unit:�.

Form B02 -DN

Issued together with Decision No. 167/2000/QD-BTC of October 25, 2000 and amended and supplemented under Circular No. 89/2002/TT-BTC of October 9, 2002 of the Finance Ministry

RESULTS OF BUSINESS ACTIVITIES

Quarter � Year�

Part I - Profits, losses

Criteria

Code period

This period

Last

Accrued amount from the beginning of the year

1

2

3

4

5

Turnover from goods sale and service provision

01

Reductions (03 = 04+05+06+07)

03

- Trade discounts

04

- Reductions of the price of goods sold

05

- Returns of goods sold

06

- Special consumption tax, export tax, payable VAT calculated by the direct method

07

1. Net turnover from goods sale and service provision (10 = 01 - 03)

10

2. Cost of goods sold

11

3. Gross profits from goods sale and service provision (20 = 10 -11)

20

4 Turnover from financial activities

21

5. Financial expenditures

- In which: Payable loan interests

22

23

6. Cost of goods sale

24

7. Enterprise management costs

25

8. Net profits from business activities

[30 = 20 + (21-22) - (24+25)]

30

9. Other incomes

31

10. Other expenses

32

11. Other profits (40 = 31-32)

40

12. Total pre-tax profits (50 = 30+40)

50

13. Payable enterprise income tax

51

14. After-tax profits (60=50-51)

60

2.2 Part on explanation of the form

RESULTS OF BUSINESS ACTIVITIES

Part I - Profits, losses:

a/ Reporting content:

Reflecting the situation and results of business activities of the enterprises, including business results and other results.

All criteria in this part demonstrate: Total amounts arising in the reporting period; data of the previous period (for comparison); and accrued amounts from the beginning of the year till the end of the reporting period.

b/ Sources of reporting data:

- The previous period�s reports on the results of business activities.

- Accounting books in the period, which are used for accounts of classes 5 to 9.

c/ Content and method of establishing criteria in the reports on the results of business activities

Data recorded in column 4 (Last period) of Part I "Profits, losses" of the current period�s reports shall be based on the data recorded in column 3 (This period) of this report of the previous period according to each relevant criterion.

Data recorded in column 5 (Accrued amount from the beginning of the year) of Part I "Profits, losses" of the current period�s report on the results of business activities shall be based on the data recorded in column 5 (Accrued from the beginning of this year) of this report of the previous period plus (+) data recorded in column 3 (This period). The achieved results shall be recorded in column 5 of this report of the current period according to each relevant criterion.

The content and method of establishing criteria to be inscribed in column 3 (This period) of Part I "Profits, losses" of the Report on the results of business activities in the current period are as follows:

Part I - Profits, losses

Turnover from goods sale and service provision (Code 01):

This criterion reflects total turnover from the sale of goods and finished products and the provision of services in the enterprises� reporting period.

Data to be recorded in this criterion are accrued amounts arising in the Credit side of Account 511 "Turnover from goods sale and service provision" and Account 512 "Internal turnover" in the reporting period.

Reductions (Code 03)

This criterion reflects comprehensively amounts recorded as decrease in total turnover in the period, including: trade discounts, reductions of the price of goods sold, returns of goods sold, special consumption tax, export tax, payable VAT calculated by the direct method, which must be corresponding to the turnover already determine in the reporting period.

Code 03 = Code 04 + Code 05 + Code 06 + Code 07.

Trade discounts (Code 04):

This criterion reflects total trade discounts granted to the buyers of the enterprises� goods for the quantities of goods, finished products and services already sold in the reporting period.

Data to be recorded in this criterion shall be based on the amounts arising in the Credit side of Account 521.

Reductions of the price of goods sold (Code 05):

This criterion reflects the reductions of the price of goods sold to the enterprises� buyers for the quantities of goods and finished products of inferior or deteriorated quality arising in the reporting period.

Data to be recorded in this criterion are accrued amounts arising in the Credit side of Account 532 "Reductions of the price of goods sold" in the reporting period.

Returns of good sold (code 06):

This criterion reflects the total selling price of the quantities of goods and finished products returned in the reporting period.

Data to be recorded in this criterion are accrued amounts arising in the Credit side of Account 531 "Returns of goods sold" in the reporting period.

Payable special consumption tax, export tax and VAT calculated by the direct method (Code 07):

This criterion reflects total special consumption tax or export tax, VAT calculated by the direct method to be paid into the State budget according to the turnover generated in the reporting period.

Data to be recorded in this criterion are the sum of amounts arising in the Credit side of Account 3332 "Special consumption tax," Account 3333 "Export and import taxes," (Details of the export tax), corresponding to the Debit side of Accounts 511 and 512; and amounts arising in the Credit side of Account 3331 "Payable VAT" corresponding to the Debit side of Account 511 in the reporting period.

Net turnover from goods sale and service provision (Code 10):

This criterion reflects turnover from the sale of goods and the finished products and the provision of services after subtracting reductions (trade discounts, reductions of the price of goods sold, returns of goods sold, special consumption tax, export tax, and VAT calculated by the direct method) in the reporting period, which shall serve as basis for calculating the results of business activities of the enterprises.

Code 10 = Code 01 - Code 03.

Cost of goods sold (Code 11):

This criterion reflects total cost of goods, production cost of finished products already sold, direct expenses of services already provided, other expenses calculated into or recorded as decrease in the cost of goods sold in the reporting period.

Data to be recorded in this criterion are accrued amounts arising in the Credit side of Account 632 "Cost of good sold" in the reporting period, corresponding to the Debit side of Account 911 "Determination of business results."

Gross profits from goods sale and service provision (Code 20):

This criterion reflects the difference between net turnover from goods sale and service provision and the cost of goods sold arising in the reporting period.

Code 20 = Code 10 - Code 11.

Turnover from financial activities (Code 21):

This criterion reflects net turnover from financial activities (Total turnover minus (-) VAT calculated by the direct method (if any) related to other activities) arising in the enterprises� reporting period.

Data to be recorded in this criterion are accrued amounts arising in the Debit side of Account 515 "Turnover from financial activities", corresponding to the Credit side of Account 911 in the reporting period.

Financial expenditures (Code 22):

This criterion reflects total financial expenditures, including payable loan interests, expenses for copyright, expenses for joint-venture activities � arising in the enterprises� reporting period.

Data to be recorded in this criterion are accrued amounts arising in the Credit side of Account 635, corresponding to the Debit side of Account 911 in the reporting period.

Payable loan interests (Code 23):

This criterion reflects expenses for payable loan interests calculated into financial expenditures in the reporting period.

Data to be recorded in this criterion shall be based on accounting books detailing Account 635.

Sale costs (Code 24):

This criterion reflects total sale costs allocated to the quantities of goods, finished products and services already sold in the reporting period.

Data to be recorded in this criterion are the sum of amounts arising on the Credit side of Account 641 "Sale costs" and amounts arising in the Credit side of Account 1422 "Expenses awaiting transfer" (details of the sale costs), corresponding to the Debit side of Account 911 "Determination of business results" in the reporting period.

Enterprise management costs (Code 25):

This criterion reflects total enterprise management costs allocated to the quantities of goods, finished products and services already sold in the reporting period.

Data to be recorded in this criterion are the sum of amounts arising on the Credit side of Account 642 "Enterprise management costs" and amounts arising in the Credit side of Account 1422 "Expenses awaiting transfer" (details of enterprise management costs), corresponding to the Debit side of Account 911 "Determination of business results" in the reporting period.

Net profits from business activities (Code 30):

This criterion reflects the results of business activities of the enterprises in the reporting period. This criterion is calculated on the basis of gross profits from goods sale and service provision plus (+) turnover from financial activities minus (-) financial expenditures, sale costs and enterprises management costs allocated to the quantities of goods, finished products and services already sold in the reporting period.

Code 30 = Code 20 + Code 21 - (Code 22 + Code 24 + Code 25).

Other incomes (Code 31):

This criterion reflects other incomes (less payable VAT calculated by the direct method) arising in the reporting period.

Data to be recorded in this criterion are based on amounts arising on the Debit side of Account 711 "Other incomes," corresponding to the Credit side of Account 911 "Determination of business results" in the reporting period.

Other expenses (Code 32):

This criterion reflects other expenses.

Data to be recorded in this criterion are based on amounts arising on the Credit side of Account 811 "Other expenses," corresponding to the Debit side of Account 911 "Determination of business results" in the reporting period.

Other profits (Code 40):

This criterion reflects the difference between other incomes (less payable VAT calculated by the direct method) and other expenses in the reporting period.

Code 40 = Code 31 - Code 32.

Total pre-tax profits (Code 50)

This criterion reflects total profits achieved in the enterprises� reporting period before subtracting enterprise income tax on business activities and other activities arising in the reporting period.

Code 50 = Code 30 + Code 40.

Payable enterprise income tax (Code 51):

This criterion reflects total enterprise income tax payable in the reporting period.

Data to be recorded in this criterion are based on amounts arising on the Credit side of Account 3334 "Enterprise income tax minus (-) the enterprise income tax amounts reduced from the payable tax amount and the positive difference between the temporarily-paid enterprise income tax amount according to the quarterly notices of the tax offices and the actual payable enterprise income tax amount when the tax settlement reports are approved.

After-tax profits (Code 60):

This criterion reflects total net profits from the enterprises� activities after subtracting the payable enterprise income tax amount arising in the reporting period.

Code 60 = Code 50 - Code 51.

3. Explanation of financial statements

The model explanation of financial statements, after being revised (see Appendix 2)

On the basis of the four accounting standards issued together with the Finance Minister�s Decision No. 149/2000/QD-BTC of December 31, 2001, explanations of financial statements (form B09-DN) are explained and have some criteria revised and supplemented as follows:

a/ To supplement Section 3.2 "A number of detailed criteria regarding inventory" in the explanation of financial statements (form B09-DN) related to the accounting standard "Inventory":

- Original cost of total inventory;

- Value re-included into the inventory price decrease reserve in the period;

- Cases or events leading to the addition to or re-inclusion of the inventory price decrease reserve;

- The book value of inventory (the original price minus (-) the inventory price decrease reserve) already mortgaged or pledged as security for payable debts.

b/ To explain, revise and supplement the following criteria in the explanation of financial statements (form B09-DN) related to the accounting standard "Tangible fixed asset" and the accounting standard "Intangible fixed assets."

- The first em rule of Section 2.4 in the explanation of financial statements is revised as: "Principles for determining the historical cost of tangible fixed asset and intangible fixed assets."

- The second em rule of Section 2.4 in the explanations of financial statements is revised as :"Depreciation method, useful life or depreciation rate of tangible fixed asset and intangible fixed assets."

- Section 3.3 "Situation of increase and decrease of fixed assets" in the explanation of financial statements presents further the following criteria:

+ Residual value of tangible fixed asset and intangible fixed assets already mortgaged or pledged as security for loans;

+ Residual value of tangible fixed asset and intangible fixed assets temporarily not in use;

+ Historical cost of fully depreciated tangible fixed asset and intangible fixed assets still in use;

+ Residual value of tangible fixed asset and intangible fixed assets awaiting liquidation;

+ Initially recognized reasonable value, accrued depreciation value, residual value of intangible fixed assets granted by the State;

+ Commitments to the future purchase and sale of tangible fixed asset and intangible fixed assets of big value;

+ Reasons for intangible fixed assets to be depreciated for more than 20 years;

+ Other changes in tangible fixed asset and intangible fixed assets.

c/ To supplement a number of criteria to Section 4 in the explanation of financial statements (form B09-DN) related to the accounting standard "Turnover and other incomes."

- Turnover from the sale of products and goods:

In which: turnover from exchange of products and goods

- Turnover from service provision:

In which: turnover from exchange of services

- Deposit interests, loan interests, yields from investment in bonds and bills.

- Profits from the sale of foreign exchange and from exchange rate difference;

- Interests from the sale of goods on deferred payment;

- Enjoyed payment discounts;

- Dividends and distributed profits;

- Other financial turnover.

VI. IMPLEMENTATION PROVISIONS

1. This Circular takes implementation effect from the fiscal year of 2002. All previous regulations contrary to this Circular are hereby annulled; other accounting matters not guided in this Circular shall comply with the current enterprise accounting regime.

2. If there are provisions in the accounting standards, which different from the Finance Ministry�s guidance on the financial regulations and business cost-accounting of the enterprises, such provisions and the guidance in this Circular shall be complied with.

3. The companies and corporations that have specific accounting regimes already approved by the Ministry of Finance must base themselves on 04 accounting standards issued together with Decision No. 149/2001/QD-BTC and this Circular to issue appropriate guidelines and supplements.

4. The ministries, the People�s Committees, the Finance Services and the Tax Departments of the provinces and centrally-run cities shall have to guide the enterprises in implementing this Circular. Any problems arising in the course of implementation should be reported to the Ministry of Finance for study and settlement.

For the Finance Minister

Vice Minister
TRAN VAN TA